Justice Scalia delivered the opinion of the Court in Michigan v. EPA (Environmental Protection Agency) today in a 5-4 ruling. In the case, which included numerous states as petitioners, Scalia found that the EPA should have considered the costs of the regulations to the power industry before deciding whether and what limits they should set on emissions.
Petitioners included the states of Michigan, Alabama, Alaska, Arizona, Arkansas, Idaho, Indiana, Iowa, Kansas, Kentucky, Mississippi, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, Texas, Utah, West Virginia, and Wyoming.
The case involved the EPA’s “costliest regulations ever issued” which involved limits on mercury, arsenic and acid gases emitted by coal-fired power plants. The Agency issued a “Regulatory Impact Analysis” alongside its regulation that estimated that the regulation would force power plants to bear costs of $9.6 billion per year.
In his opinion Scalia noted, “The Agency could not fully quantify the benefits of reducing power plants’ emissions of hazardous air pollutants; to the extent it could, it estimated that these benefits were worth $4 to $6 million per year. Ibid. The costs to power plants were thus between 1,600 and 2,400 times as great as the quantifiable benefits from reduced emissions of hazardous air pollutants.”
According to Scalia, “EPA’s disregard of cost rested on its interpretation of §7412(n)(1)(A), which, to repeat, directs the Agency to regulate power plants if it “finds such regulation is appropriate and necessary.” The Agency accepts that it could have interpreted this provision to mean that cost is relevant to the decision to add power plants to the program. But it chose to read the statute to mean that cost makes no difference to the initial decision to regulate.”
Case law allowed agencies to “operate within the bounds of reasonable interpretation.” Scalia found that the EPA “strayed far beyond those bounds when it read §7412(n)(1) to mean that it could ignore cost when deciding whether to regulate power plants.”
Scalia wrote, “The Clean Air Act treats power plants differently from other sources for purposes of the hazardous-air-pollutants program. Elsewhere in §7412, Congress established cabined criteria for EPA to apply when deciding whether to include sources in the program. It required the Agency to regulate sources whose emissions exceed specified numerical thresholds (major sources). It also required the Agency to regulate sources whose emissions fall short of these thresholds (area sources) if they “presen[t] a threat of adverse effects to human health or the environment . . . warranting regulation.” §7412(c)(3). In stark contrast, Congress instructed EPA to add power plants to the program if (but only if) the Agency finds regulation “appropriate and necessary.” §7412(n)(1)(A). One does not need to open up a dictionary in order to realize the capaciousness of this phrase. In particular, “appropriate” is “the classic broad and all- encompassing term that naturally and traditionally includes consideration of all the relevant factors.” 748 F. 3d, at 1266 (opinion of Kavanaugh, J.). Although this term leaves agencies with flexibility, an agency may not “entirely fai[l] to consider an important aspect of the problem” when deciding whether regulation is appropriate. State Farm, supra, at 43.”
Chief Justice John Roberts and justices Clarence Thomas, Samuel Alito and Anthony Kennedy joined Scalia in overturning the rule, while justices Elena Kagan, Sonia Sotomayor, Stephen Breyer and Ruth Bader Ginsburg joined in dissent.
Kagan found that the EPA did properly consider costs but only at a later stage in the regulation. She said the Court was micromanaging the “EPA’s rulemaking, based on little more than the word ‘appropriate’ — runs counter to Congress’s allocation of authority between the Agency and the courts.”
Scalia slaps down the dissent when he wrote, “But for what it is worth, the dissent vastly overstates the influence of cost at later stages of the regulatory process. For example, the dissent claims that the floor standards—which the Act calibrates to reflect emissions limitations already achieved by the best-performing sources in the industry—reflect cost considerations, because the best-performing power plants “must have considered costs in arriving at their emissions outputs.” EPA did not rely on this argument, and it is not obvious that it is correct. Because power plants are regulated under other federal and state laws, the best-performing power plants’ emissions limitations might reflect cost-blind regulation rather than costconscious decisions. Similarly, the dissent suggests that EPA may consider cost when dividing sources into categories and subcategories. Yet according to EPA, “it is not appropriate to premise subcategorization on costs.” 77 Fed. Reg. 9395 (emphasis added). That statement presumably explains the dissent’s carefully worded observation that EPA considered “technological, geographic, and other factors” when drawing categories, which factors were in turn “related to costs” in some way…”
Scalia argued in his ruling, “One would not say that it is even rational, never mind “appropriate,” to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits. In addition, “cost” includes more than the expense of complying with regulations; any disadvantage could be termed a cost. EPA’s interpretation precludes the Agency from considering any type of cost— including, for instance, harms that regulation might do to human health or the environment. The Government concedes that if the Agency were to find that emissions from power plants do damage to human health, but that the technologies needed to eliminate these emissions do even more damage to human health, it would still deem regulation appropriate. See Tr. of Oral Arg. 70. No regulation is “appropriate” if it does significantly more harm than good.”
Arizona State Representative Bob Thorpe stated, “Based upon SCOTUS rulings from the past 5-days, I would have never expected the courts to actually side with the states over the out of control EPA and Obama’s personal war on coal. Coal-fired power stations were built in Arizona at the insistence of the Federal government. Due to the Fuel Use Act of 1978, the Feds forced Arizona to build coal-fired power plants because they felt there wasn’t enough available natural gas. Arizona followed Federal instructions and has benefited from low sulfur coal, an abundant local fuel that has provided clean, low-cost, reliable energy, and good paying jobs for our Native citizens on the reservations. Now in a twist of cruel irony, the EPA wants to fine and punish Arizona for following Federal instructions. I am very pleased that the court has sided with our utility customers and has recognized how unreasonable EPA rulings have become.”